Consumers have readily embraced the Internet for conducting financial transactions-checking balances, transferring funds, and buying and financing automobiles.
The one holdout, however, has been the granddaddy purchase, the home mortgage, even though the Internet has had more of a streamlining effect on what was a month-long-plus process more than any other type of loan.
What's the hold-up? And how long before all consumers expect to click-and-finance their home loan as easily as any other transaction?
The biggest hurdles, according to Jason Regalbuto, president of Beanstalk Networks, is that in addition to the simple resistance there is to any change, the stakes are much higher in mortgage lending.
Many consumers fear losing control of real estate data and what they perceive as a significant amount of personal data, as well.
"Those are issues that have to be handled with kid gloves," he said.
Beanstalk Networks offers OpenClose MTG (for "mortgage technology generation"), which offers mortgage brokers, banks and consumers the ability to originate and complete a loan in a matter of minutes. Using the system, originators can upload files, pre-qualify borrowers or run credit checks while lenders can float requests, underwrite loans and track digital documents. Just last month, OpenClose secured its 10,000th user of its web-based platform. Among its larger clients is M & T Mortgage Corp., in Orlando, Fla., that will provide the system to its 8,000 approved brokers. Brokers can run loan applications through third-party vendors including Fannie Mae and Freddie Mac. Regalbuto said brokers are the primary driving force in the online mortgage world.
Overcoming Reluctance
OpenClose officials believe the reluctance to migrate to financing home loans electronically can be overcome with better pricing and a proper presentation of the benefits of online mortgages: no expensive overnight mailings, no lost mail or faxes, no extra time or mistakes when re-keying data, and best of all, no more ongoing uncertainty over where the borrower stands in the process. As a result OpenClose officials claim a lender can increase applications by two to three times when using the solution.
A broker and borrower can now sit at home with a laptop or meet for a cup of coffee for the entire mortgage process, although the avalanche of signatures at the end isn't going away any time soon, according to Beanstalk Network's co-founder J.P. Kelly. Kelly said once brokers see the improved accuracy, speed and live interest rates before their eyes, they quickly hop on board to online mortgages.
"Now they have to have it to compete," Kelly said.
However fast or efficient online mortgages might be, it's still new technology and it does take time to understand and implement, according to Renee Dickson, product and marketing manager with Wings Financial FCU, St. Paul, Minn., and a member of the CUNA Lending Council.
For many members, she said, the issue remains control over personal data and privacy, a top concern for her and the 118,000 members at Wings Financial. Dickson said she has heard other credit union officials voice concerns on privacy and a reluctance to let an outside party control a loan or make the approval decision for them.
"I think they just want to get their hands on it," Dickson said. "The numbers alone aren't the entire picture."
Dickson said she would rather deal with a credit union member she sees every week or more, instead of just reading member data and then making a stand-alone decision. Still, the improvement in processing speed is undeniable, and Wings Financial is exploring adding an online mortgage lending component in the future.
